Milton Trial Mark Russell Cites
Black-Scholes On His Stock Citing
Russell Lee, Patreon Maxwell
Trial book - NY
Sept 20 –
The trial of Nikola founder
Trevor Milton for wire and
securities fraud moved, on
September 20, to the cross
examination of Nikola's Mark
Russell. Inner City
Press was there. Thread:
AUSA Estes: Yesterday you were asked about the
Badger... This email calls the Badger a
distraction. What was your understanding of
Russell: It would be a dilution of our focus.
AUSA: How so? Russell: A pick-up would require
time and money.
AUSA Estes: Mr. Russell did you have a concern
about all this? Milton's lawyer: Objection!
Leading! Judge Ramos: Overruled. Russell: Yes,
I was concerned.
AUSA: And did you vote for it? Russell: Yes, I
saw that it would pass. And we try to keep our
board votes unanimous because -- Milton's
Judge Ramos: Overruled. Russell: The general
rule is, you disagree behind closed doors.
Russell: The question was, why should be be in
the pick-up truck space? AUSA: After Nikola
moved to go public through the SPAC, did you
discuss with Mr. Milton his role? Russell:
Trevor said, I'm not sure the company if ready
for me to step away
AUSA: How did you feel about that? Milton's
lawyer: Objection! Judge Ramos: Overruled.
Russell: It wasn't what we agreed. AUSA:
Did you try to change it? Russell: I did my
best to persuade people. But he became
Russell: Then Trevor proposed that he be
allowed to sell $70 million of his shares.
AUSA: Did you speak with Mr Milton about that
it means to be the leader of a public company?
Russell: I told him his public statements had
to be vetted like SEC filings
AUSA Estes: Let's review these text
message -- Milton's lawyer Mukasey: Objection!
Judge Ramos: Overruled. Mukasey: If I might,
one of the recipients is not with Nikola.
[Speaking objection] Judge Ramos: Overruled.
AUSA Estes: Let's go over them...
Russell: The language in his tweets would not
have passed muster with Legal. Mukasey:
Objection! Judge Ramos: Overruled. Russell: It
was suggested to Trevor that he turn off his
social media, or let Britton pre-screen his
AUSA Estes: Mr. Russell, were you on
social media? Russell: No. AUSA Estes: So how
did you see his tweets? Russell: They showed
me screen shots.
AUSA Estes: We offer GX22. Mukasey: Hearsay,
may we approach Judge Ramos: You may.
[Whispered sidebar ensues] AUSA Estes: When
Mr. Girsky says, Trevor pretty active on
social media about the Badger, what did you
Russell: I wrote, I wish he wouldn't... We'd
try to persuade him. AUSA Estes: Did you have
ideas with passwords? Russell: We changed to
AUSA Estes: Then what happened? Russell: He
talked to someone and got it reversed, he kept
tweeting... Later he said he wanted to
announce hydrogen stations on his media blitz.
AUSA: Which media blitz? Russell: As soon as
we went public.
Russell: Our market cap had gone from $3
billion to $27 billion in five days. Mr.
Peterson (sp) said, This is setting up for a
massive dive. AUSA: And here, Michael
Erickson wrote to you about Mr. Milton's
social media, "It's news to me." Russell: Yes.
Now on screen in courtroom (and before each
juror), text exchange between Russell and Kim
Brady, who said Rivian's CEO's post was a dig
Russell: Yes, it was. I cited Rivian as an
example of raising capital without an
aggressive social media campaign.
Russell: Mr. Milton said he thought this was a
democratization of the capital markets. I told
him we should vet this statements. AUSA: Were
you able to? Russell: No.
AUSA: On stock price, how did you differ?
Russell: Trevor was focused on it day to day.
Now US plays Milton says, "People love Apple
because everyone touches their product... I
needed to touch the consumer, pick-up truck's
for that, Robinhood investors, family office."
AUSA: What about Robinhood? Russell: It was
symbolic of the investors he targeted
AUSA: What was Mr. Milton purchasing?
Russell: Ranch land in Utah and Wyoming. And
jets. I told him he should wait. We had no
Judge Ramos calls a break. Then, with
jury out of room, asks, Are you planning to
have a witness in a wheelchair later this
week? AUSA Estes: Yes. Judge Ramos: Just tell
us when. Don't be late. Thread will continue
They'd back. AUSA Estes: Do you wish
Nikola had taken down the link to the Tesla
Charts podcast? Russell: I wish we had.
Elizabeth Fretheim flagged it.
AUSA: How about Transport Topics of March 12,
2020... Line 12... Was Nikola getting hydrogen
Russell: No. Inner City Press @innercitypress
· 2h AUSA Estes: Did you ask Mr. Milton to do
on this podcast? Russell: No. AUSA: Did you
give him talking points? Russell: No.
AUSA: How would you describe your
relationship with Mr. Milton at this time?
Russell: Strained. I thought the Badger
was too big a risk. He continued to push
it. AUSA: Did you and Mr. Brady and Mr.
Worthen speak to him? Russell: We called it an
AUSA: How did he respond? Russell: He
expressed emotional hurt. He told me to decide
if he was on his side or not. I started
considering resigning. But it would have
created a crisis for the company. Soon the
short seller report came out.
Russell: The chair told me the board would
start negotiating with Mr. Milton for his
AUSA: Nothing further.
Judge Ramos: Cross examination.
Milton's lawyer Mukasey: So she played you
some podcasts, you recall?
Russell: Yes. Mukasey: Nikola has models,
Mukasey: Trevor was pretend talented at
promotion, correct? Russell: Yes. Mukasey: Are
you familiar with the so called in-motion
video, rolling a truck down a hill?
Russell: Yes. Mukasey: The video was about the
Nikola 1, right? Russell: Right.
Mukasey: Trevor is 20 years younger than you,
so has less experience, right? Russell: Yes.
Mukasey: You were a mentor, right? Russell: I
tried to help him.
Mukasey: Would you say that the company was
sort of like Trevor's child? AUSA Estes:
Objection! Calls for speculation.
Judge Ramos: Sustained as to the form of the
question. Mukasey: Would you say he had an
emotion connection to the company? Russell:
Mukasey: You considered the beer run
[Busch trucking in Nikola 2] a great success
right? Russell: It came off just like we
Mukasey: Let's talk about the board - one
member came from Hanwha, right? Russell: She's
no longer on the board. But she was.
Mukasey: OK, so you announced about the SPAC
merger in March 2020 and an S-4 was filed,
right? Russell: I haven't looked at the S-4
recently. Mukasey: I'm offering it into the
Mukasey: Trevor's sale of $70 million in stock
was disclosed, right? Russell: It was.
Mukasey: This 10-Q says Nikola had Ernst &
Young as auditor, right? Russell: Yes. Judge
Ramos: Let's take a break. They've back.
Mukasey: You are familiary with Elon Musk's
presence on Twitter, correct? AUSA Estes:
Objection! Judge Ramos: Overruled. Russell: I
Mukasey: The meeting with Softbank, there was
a lot of puffing, right? Russell: What do you
mean by puffing?
Mukasey: Didn't you tell the US Attorney's
Office that he didn't make any factual
misrepresentations? AUSA: Objection! Judge
Russell: He went off-script in the Softbank
meeting. But I don't remember any factual
misrepresentations. Mukasey: In some of this,
you use the present tense - you weren't trying
to mislead anyone, were you? Russell: No, I
Mukasey: Your shares, how much are they
worth? Russell: I'm not sure. Yesterday, $19
to 20 million. I mean, 190 to 200 million
dollars. [Some jurors perk up]
Judge Ramos: You mentioned Black-Scholes, what
is it? Russell: A way of calculating the value
Mukasey: In this podcast, Trevor says You want
the Robinhood investors, but you want to turn
them into Warren Buffetts, long time buy and
Russell: Yes. Mukasey: You realize the
podcasts are very long, right? Russell:
Mukasey: You agree that if someone
snipped a little portion of one of your
interviews, it could distort --
AUSA Estes: Objection! Judge Ramos: Sustained.
Mukasey: While you say you had concerns
strategically about the Badger, it was bad
ass, right? Better than [Musk's / Tesla's]
Russell: I liked the way it looked. Mukasey:
In the industry, it's normal to use donor
parts, right? Russell: Yes.
Mukasey: Nikola got a grand jury subpoena and
agreed to cooperate with the government,
Russell: We provided a lot of documents.
Mukasey: We asked to meet with you, and you
declined, right? Russell: I did. On advice of
Mukasey shows video of Russell pitching
Nikola semi, saying "we made the hydrogen in
the first place." You didn't mean to mislead,
Russell: I did not. Mukasey: When did the
intervention take place? Russell: I didn't
Mukasey: No further questions.
And after a short re-direct, next witness is
AUSA: Where do you work?
Amzallag: Nikola, in social media, since March
Trial will continue.
case is US v.
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